After last week’s sharp gap-down from support, Apple (AAPL) shares began an initial rally off a key support target level.

Let’s update our daily Apple (AAPL) chart and note “open air” along with new key targets for a retracement… or continued breakdown if the retracement thesis fails.

Here’s a “pure price” Fibonacci Confluence Chart to get us started:

The two Fibonacci Retracement grids take into account the April swing low ($388) and the September low ($448) drawn to the recent swing high near $575 per share.

The result is a “Confluence” or overlapping retracement grid which draws our attention to the yellow highlight in which price is ‘bouncing’ or playing ping-pong currently after the gap-down.

The key short-term levels to use for trade planning or active management are the $510 upper resistance (which is also a prior swing high from mid-2013) and $495 which is similarly a prior high from September and “spike” reversal low recently.

Though it doesn’t appear to be as important (because price chopped through it each time without stopping), the $500 per share “Round Number” level intersects the 38.2% Fibonacci Retracement as drawn.

In simplest terms, a breakthrough above $510 sets up a potential “Open Air” bullish breakout play which targets the $525 higher cluster. That’s the goal of the “Retracement” or Bounce Thesis (calling for a movement up off the $495 confluence toward $525).

Otherwise, a bearish breakdown and “trend reversal” thesis continues to play out on a trigger-break under the $495 per share level.

The initial swing trading downside target on a break under $495 would be the $480 Fibonacci and Price Confluence.

We can see the importance of the current level from the Daily Chart with indicators:

The $495 level again was a resistance cluster from mid-2013 and appears to be holding as a key support or pivot level after the gap down.

I also wanted to draw your attention to the Distribution Volume pattern which developed as price traded higher yet volume declined. Volume increased during the retracement or sell phases, and particularly on the day of the gap.

In this quick update, I wanted to highlight the Fibonacci Grid for potential trade planning from the “Bullish Bounce” vs. the “Bearish Breakdown” strategies.